Using Personal Injury Protection (PIP)

Insurance Issues - Personal Injury Protection ( PIP ):

How does PIP work? Personal Injury Protection or PIP is a coverage that is required to be offered in the State of Texas.

The Law Office of Doug Goyen has litigated numerous Personal Injury Protection (PIP) cases on behalf of people who were wrongfully denied coverage by unscrupulous insurance companies. If you need an attorney regarding your PIP, you need to call a Dallas Personal Injury Protection attorney. Call us to see if we can help.

PIP is a “no fault” insurance. The way that Texas has caused PIP to be “no fault” is by stating that the insurance company cannot “subrogate” (collect) against any other insurance in order to get their money back. This means that the amount of money received via your PIP coverage should not affect your liability settlement with another person’s liability insurance.

Significance of no “subrogation”: To understand the significance of insurance companies not being able to subrogate, you need to first understand the word “subrogation”, and then need to understand the “collateral source” rule.

Subrogation: Is the process by which an insurance company who has paid a loss under its policy is allowed to collect against other insurance policies that may owe for the claim either totally, or at least a portion of the claim. So for example, if your health insurance company pays for your medical bills resulting from an automobile accident that was caused by someone else, your health insurance company will often try to “subrogate” against the automobile insurance policy of the person who caused the accident in an attempt to get their money back from the responsible person’s insurance.

In Practice: Often, then insurance company that is attempting to “subrogate” simply sends a letter to the attorney of the injured person and the other insurance company - placing them on notice of their “lien” on the case - and demanding that their name be placed on any settlement checks to protect their right of subrogation. Seldom do they hire their own attorney to do the work required to actually do the collecting - the exceptions are when there is a significant amount paid out by the health insurer, and the injured party has hired an attorney to sue the other driver’s liability insurance company, then sometimes the health insurance company will hire an attorney to try and ensure they get their cut of the settlement proceeds.

PIP Carriers: Are not allowed to subrogate, therefor the amount they pay do not affect the amount you receive in your settlement from the liability carrier typically.

Collateral Source Rule: Is a rule in Texas that a jury is unable to consider whether insurance has paid any part of the claim or not. Because of this, the only thing introduced in a trial to prove injury damages is the amount of actual damages.

Reasons for Collateral Source Rule:

One reason for this is that it avoids the need to complicate the evidence produced in an injury trial. If insurance is allowed to be introduced, then the amount paid for the premiums would need to be introduced (because the defendant didn’t pay for the premiums, why should he get the benefit of the payments made?).

Subrogation: As discussed above regarding “subrogation” the health insurance companies place a “lien” on any amount recovered in a lawsuit for injury - some of these liens are automatic and statutory (Medicare / Medicaid). If the jury was to NOT pay for the amount covered by insurance, and then the health insurer then “subrogated” out of the amount awarded by the jury, then the amount given to the injured party would be reduced double by the amount of the bills (first by the jury - who would take out of their award the amount paid by health insurance, and then again by the health insurer who would take out from the jury award the amount they paid). Additionally, the injured party would have had to pay premiums for this coverage that is not reimbursed by the person causing the injury or his liability insurance.

Insurance subrogation issues are contractual issues between the person holding the health insurance and the injured party. In other words, it’s a separate claim, separate lawsuit, between the injured party and his health insurance company. If the injured person does not pay his health insurance company back pursuant to the health insurance contract, then the health insurance company has the right to sue the injured party, cancel their benefits, place a lien on any settlement or judgment proceeds, etc.

Victim gets smaller award and Wrongdoer Gets less punishment if victim carries health insurance: Lets suppose a “wrongdoer” is a repeat drunk driver - hypothetically he causes 2 different accidents while intoxicated. Both create the exact same injury to the victim (two broken legs). In accident 1 the victim has health insurance that pays his bills. In accident 2 the victim has no insurance. If a jury were allowed to consider the amount health insurance paid, then the “wrongdoer” gets less punishment in accident 1 due to the victim having been responsible enough to buy health insurance. In accident 2 the victim was less responsible - did not bother to get health insurance - yet he gets a larger award due to the jury not being able to reduce due to health insurance. This gives a perverse result of responsible people in society (people who take the time and care to actually “pay” for health insurance) given less rights and less award due to their being responsible. It punishes the rights of those who act responsibly (people who buy health insurance), and rewards those who do NOT act responsibly (those who don’t protect themselves with health insurance).

Windfalls - since the injured party was the person who “paid” premiums for his health insurance, the injured party should be the person who reaps any “windfall” for having paid for this coverage - the “wrongdoer” who caused the injury should not be allowed this “windfall” since he had no part in paying the premiums and is not a party to the health insurance contract.

Deterrence - Allowing the wrongdoer (or his liability insurance company) to avoid paying the full amount of the damages - by reducing the amount by the amount paid by health insurance, reduces the deterring effect of the law. Making wrongdoers pay for the harm they cause helps to deter them (or others) from causing such actions in the future. It may not deter all wrongdoers from repeating, but if it just deters a few - or causes liability insurers to create programs that encourage their insureds to be safer, then it is worthwhile to force them to pay for the harm they cause.

Contract v. Tort - the benefits owed to the injured person by the health insurer are contractual. The wrongdoer has no right to force the health insurance to pay the medical bills - this is a contract between the injured party and his health insurer has contracted with. To allow a wrongdoer to somehow get into the middle of this contractual relationship allows in an outsider into a contractual relationship. Not only allowing just any outsider, but an outsider who has committed a wrongful act that caused harm - who can then try to obtain benefit of a contract between the injured victim and his health insurance that the injured victim had the foresight and responsibility to take.

Rich uncle - The paying of the medical bills by health insurance is similar to the paying of the of the medical bills by a rich uncle, or friend, or someone else as a gift to the person they care about. The law does not allow the wrongdoer to get benefit of a rich uncle paying their medical bills - as this is between the rich uncle and the injured party - maybe the injured party pays the rich uncle back, maybe it’s a gift that never gets paid back - it does not matter, the wrongdoer still owes the full amount regardless.

Increased Insurance Premiums - some argue that the collateral source rule causes insurance premiums to be higher. This doesn’t tell the whole story and is not true if you look at ALL the insurance involved. It makes the wrongdoer’s insurance go up - sure - and it should go up due to his wrongdoing, but it makes the injured victim’s insurance stay down because they get their money back (as they should). Insurance pays the same amount - it just shifts the burden from the victim’s insurance to the wrongdoer’s insurance. The insurance that is then burdened is the insurance of the wrongdoer (which is the correct result). The medical bills paid by the health insurer are reduced by the amount “subrogated”. In other words, the health insurer of the innocent victim / injured party goes down as that health insurance receives its money back from the liability insurer, and the liability insurance for the wrongdoer goes up on an equal proportion to the amount that the health insurance goes down - so it balances out.

Responsibility / No Free Ride - it is the wrongdoer’s responsibility to “right the wrongs” that he created - it is not “society’s” problem, or the victim’s problem, it is the problem of the wrongdoer - he created the harms, he must correct the harms. If your child knocks out a window of a neighbor while playing baseball, we make that child pay for the entire harm he caused in repairing the window - not part of it. Our system of justice requires the same thing, if you cause harm to someone or harm to someone’s property, you are required to “right the wrongs” you cause - it is your burden for causing the wrongs - not someone else’s burden, and not “society’s” problem.

PIP Coverage:

Required Coverage: The State of Texas requires Personal Injury Protection to be offered to every person taking out automobile liability insurance. A person can reject PIP, but it must be in writing. If there is no written rejection of PIP, then there is coverage - even if it has not been paid for. In the situation of no PIP on the policy, but no written rejection exists, most courts have given the minimum limits to the insurance policy ($2500 in PIP coverage then exists).

Amount of Coverage / Limit of Liability: The minimum amount of PIP to be offered in Texas is $2500.00. There is no maximum amount. You can get as high an amount as your insurance company is willing to sell you. Typically most insurance companies offer PIP in either $2500, $5000, or $10,000 amounts.

What is Covered: Reasonable medical and funeral expenses, 80% of lost income if employed and producing income at time of loss (does not cover after person dies), care and maintenance of family or household.

Who is covered: Any “covered person” in the covered automobile is covered by the PIP. A covered person can be a permissive user or passenger in the vehicle. You must be careful of exclusion clauses in auto insurance policies that attempt to exclude any coverage while particular people drive the vehicle. In these situations, insurers are certain to attempt to avoid coverage if they can. The policy must be scrutinized and the law in this area must be referred to if this happens.

How to make claim / time limit: You must typically fill out an application sent to you from your insurance company to make your PIP claim. The policy only covers bills that are incurred within 3 years of the accident.

Offsets: Texas courts have determined that if you make a liability claim under you Uninsured/Underinsured Motorist coverage for injury, that any amounts paid by PIP coverage under the same policy is able to be “offset”. In other words, if you receive $2500 in PIP, and your Uninsured Bodily Injury claim under the same policy is worth $10,000 total value - your insurance policy can lower the amount they pay you by the $2500 they already paid under PIP (this is not done on liability policies, only Uninsured Motorist policies because the money comes out of the same policy for both PIP and Uninsured Motorist benefits).

Compare to MedPay: Medpay benefits received ARE subrogatable against another person’s liability coverage, so they can affect the amount you receive from the liability insurance from the other driver’s liability policy.

Cases where not covered: (no “use” of automobile): Most cases allow coverage if the injury is from the “use” of a covered car. Some cases where coverage has not been afforded have been - the injured person took 4 steps from car-no coverage, person shot inside a car by a drive-by shooting - no coverage because it wasn’t from the “use” of the car.

Exclusions: Intentionally caused by the injured party, while committing a felony, while attempting to flee law enforcement, while occupying any vehicle owned by the covered injured person but has not been reported on the policy, by a family member while in a vehicle owned by the family member that is not on the policy, all are reasons that the insurance company has on the policy to exclude coverage.

Other Insurance: If there are multiple PIP policies that may cover the claim, they will pay their pro-rata share of the claim.

How Quickly Claims Should be Paid: 30 days is the time limit that a PIP claim should be paid.

Assignment of Benefits: If your doctor has you sign an “assignment of benefits”, they can make the claim directly against your PIP. This is usually significant in cases where you wish to use your PIP benefits for your lost income (80%), but discover that your doctor already used all your PIP benefits for his doctors bills (instead of him using your health insurance - he decided to use your PIP).

Should you hire an attorney?: Yes, if you have been injured, and you are needing to make a claim for your injury, you likely need to at least consult with an attorney that knows the process and pitfalls regarding your Personal Injury Protection claim. Contact our office and speak to a Dallas Personal Injury Protection Attorney today.

We serve the following localities: Collin County including Allen, Frisco, McKinney, and Plano; Dallas County including Addison, Carrollton, Dallas, Garland, Grand Prairie, Irving, Mesquite, and Richardson; Denton County including Denton, Lewisville, and The Colony; Ellis County including Waxahachie; Kaufman County including Kaufman; Rockwall County including Rockwall; and Tarrant County including Arlington, Euless, and Fort Worth.